Earnings Per Share Data ("EPS") and Stock Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Earnings Per Share Data ("EPS") and Stock Based Compensation

(7) Earnings Per Share Data (“EPS”) and Stock Based Compensation

Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share for classes A, B, C and D common stockholders for the periods indicated (in thousands, except per share data):

	Three months ended June 30,						Six months ended June 30,
	(amounts in thousands)
	2016			2015			2016			2015
Basic and Diluted:
Net income attributable to UHS	$	185,577		$	182,193		$	376,336		$	356,492
Less: Net income attributable to unvested restricted share    grants		(84	)		(71	)		(173	)		(139	)
Net income attributable to UHS – basic and diluted	$	185,493		$	182,122		$	376,163		$	356,353
Weighted average number of common shares - basic		97,109			99,004			97,358			98,957
Net effect of dilutive stock options and grants based on the    treasury stock method		1,280			1,923			1,284			1,830
Weighted average number of common shares and    equivalents - diluted		98,389			100,927			98,642			100,787
Earnings per basic share attributable to UHS:	$	1.91		$	1.84		$	3.86		$	3.60
Earnings per diluted share attributable to UHS:	$	1.89		$	1.80		$	3.81		$	3.54

The “Net effect of dilutive stock options and grants based on the treasury stock method”, for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled 2.9 million for the six months ended June 30, 2016.  There were no significant anti-dilutive stock options during the three months ended June 30, 2016.  The excluded weighted-average stock options totaled 1.5 million for the six months ended June 30, 2015. There were no significant anti-dilutive stock options during the three months ended June 30, 2015.  All classes of our common stock have the same dividend rights.

Stock-Based Compensation: During the three-month periods ended June 30, 2016 and 2015, compensation cost of $10.9 million and $9.1 million, respectively, was recognized related to outstanding stock options. During the six-month periods ended June 30, 2016 and 2015, compensation cost of $23.6 million and $19.5 million, respectively, was recognized related to outstanding stock options. In addition, during the three-month periods ended June 30, 2016 and 2015, compensation cost of approximately $340,000 and $274,000, respectively, was recognized related to restricted stock.  During the six-month periods ended June 30, 2016 and 2015, compensation cost of approximately $659,000 and $493,000, respectively, was recognized related to restricted stock.  As of June 30, 2016 there was $103.9 million of unrecognized compensation cost related to unvested options and restricted stock which is expected to be recognized over the remaining weighted average vesting period of 3.0 years. There were 2,896,050 stock options granted (net of cancellations) during the first six months of 2016 with a weighted-average grant date fair value of $23.79 per share.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $24.7 million and $20.5 million during the six-month periods ended June 30, 2016 and 2015, respectively. In accordance with ASC 718, excess income tax benefits related to stock based compensation are classified as cash inflows from financing activities on the Consolidated Statement of Cash Flows. During the first six months of 2016 and 2015, we generated $35.2 million and $28.5 million, respectively, of excess income tax benefits related to stock based compensation which are reflected as cash inflows from financing activities in our Consolidated Statements of Cash Flows.